Must-do before considering a sublet

Rent it Right

By Inman News Feed
Add Comment Add Comment | Comments: 0 | Posted Jan. 13, 2012

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Rent it Right

Janet Portman
Inman News®

Q: We are subtenants who have just found out that the landlord is evicting our "landlord," the original tenant, for illegal subletting. Apparently, the original tenant didn't ask permission to sublet his place, which he was required to do. Where does this leave my daughter and me? --James C.

A: You and your daughter may be out of luck, unless you can talk the landlord into renting directly to you. Here's what you're up against.

Most landlords use a lease clause that prohibits subletting without their consent, because they want to control who lives on their property. When you think of it, this makes perfect sense. Responsible landlords spend a lot of time and effort to screen tenants, looking for those who are not only financially able to handle the rent, but those who have solid records as good tenants -- people who will take reasonably good care of the property and respect the neighbors' rights to peace and quiet. Allowing tenants to rent to someone whom the landlords haven't screened deprives them of the ability to weed out bad risks.

While it's true that the original tenant remains responsible for the rent, that will be cold comfort if subtenants turn out to be solvent but destructive, noisy or worse.

When the process works as it's intended to work, tenants who want to sublet their place for a period of time begin thinking like a landlord ("What would I need to know to accept this applicant?"). They make sure their proposed subtenants have a good shot at approaching the screening criteria that the landlord applied to them, when they first rented. It's wise to approach the landlord with the proposed subtenants' credit report, application (you can find a good application online at Nolo), and letters of recommendation.

If the landlord is convinced that the applicant appears to be able to handle the rent, and has a history of good-tenant behavior, he or she may be inclined to say "yes." Savvy landlords always make it clear that the original tenant is responsible for rent in the event that the subtenant doesn't pay, and that the subtenant is subject to all the terms and conditions of the lease signed by the original tenant.

Your "landlord," the original tenant, bypassed this process, and the landlord didn't appreciate it. Because the original tenant broke an important lease clause, the landlord could properly serve a termination notice on him, and follow through with an eviction if necessary. And because your right to occupy the premises depends on the original tenant's right to be there, when the original tenant lost that right, you too lost the ability to remain. As far as the landlord is concerned, you're unauthorized occupants.

There may be hope for you, however. You may be able to present yourself as a suitable tenant who can qualify for the rental, just like any applicant. Renting directly to you at this point would save the landlord the hassle and expense of "turning" the apartment -- cleaning, advertising, screening, and forgoing rent while he looks for a new tenant.

Do your best to convince the landlord that you were an innocent participant in the subletting scheme, and that you'll do just fine as a straight-up tenant. And in the future, when considering a sublet, always check to make sure the landlord has given written consent.

Q: When I wasn't able to come up with the full rent last month, I gave the landlord half, and he agreed that I could pay the second half in another week, which I did. But he applied the late-fee policy to the entire rent ($1,500 per month), not to the part that was overdue ($750). Is this legal? --Jamie S.

A: Late fees are meant to compensate the landlord for the actual loss he suffers when the rent doesn't come in on time. Increasingly, landlords are being challenged in court by tenants who feel that the fees are excessive, particularly when state law doesn't set a maximum late fee allowed. In this situation, landlords must convince the court that the fee they charged represents the value of their time and trouble chasing down the rent, plus the interest lost when the full rent wasn't in their bank account as expected.

As you can see, the size of a proper fee will vary according to the amount of overdue rent. Allowing landlords to impose a fee that's based partly on rent that has been received is contrary to the whole purpose of a late fee.

Some states make this point clear in their statutes, which is a good idea. For example, in Minnesota, the late-fee statute clearly states, "In no case may the late fee exceed eight percent of the overdue rent payment." (Minn. Stat. Ann. Section 504B.177.) Note that the statute refers to "the overdue rent payment," not "the rent charged" or something like that.

Landlords who are determined to collect a fee based on the entire rent charged have an option, when faced with a tenant who wants to make a partial, on-time rent payment, followed by a promise to pay the balance in the future. That landlord can refuse the partial payment and agree to accept the full rent at a later specified time, which would allow the landlord to apply the late fee to the entire rent. But although this approach is possible in theory, it's probably a bad idea in practice, at least for the landlord who wants to keep this tenant.

First, paying some now and the rest later is a powerful incentive to actually pay that second installment, to save the tenancy. Perhaps more importantly, wringing that little bit of extra money out of the tenant will engender resentment that may lead to similar finagling on the part of the tenant. Is it worth it?

For example, if your landlord's late fee was 8 percent of the overdue rent, and he charged it on the half that you paid late ($750), you'd owe $60. Refusing your partial payment and applying the fee policy to the entire rent ($1,500) would get the landlord an extra $60. But the resulting bad feelings could morph into more tenant complaints, less-than-conscientious care of the landlord's property, and maybe even a decision to move. The landlord would be much better served to forgo that 60 bucks and stay on good terms with his tenant.

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